April 15 has long brought a sinking feeling, and not just because it’s the anniversary of the Titanic’s downing. The deadline to file your tax returns remains an homage to one of life’s unpleasant certainties. But in Washington, we don’t have quite as heavy a lift during tax season as many of our fellow Americans. The state is one of seven that entirely forgoes a state income tax.
So, how does Washington remain above water financially without docking your salary? For decades, the state has leaned on a steep sales tax—currently the fifth highest in the nation—to help fund all those new light rail stations and education initiatives. Property taxes and a business and occupation tax, which levies companies based on revenue, figure prominently too. Altogether, it’s a regressive mix for a progressive state.
How Companies Pay
Like residents, Washington businesses get to skip a state income tax. Instead, Washington imposes a “business and occupation” tax based on corporations’ sales or products’ value. Rates vary by industry, with radioactive waste disposal taxed the highest, at 3.3 percent.
How Our Sales Tax Stacks Up Nationally*
Chicago, Long Beach, and Glendale, California: 10.3 percent (the nation’s highest)
Tacoma: 10.2 percent
Seattle: 10.1 percent
Los Angeles: 9.5 percent
New York: 8.9 percent
San Francisco: 8.5 percent
Denver: 8.3 percent
Boston: 6.3 percent
Washington, D.C.: 6.0 percent
Honolulu: 4.5 percent
*As of 2019
Washington State Tax Revenue By the Numbers
► Other: 14.7 percent ($3.4)
► Business and Occupation: 19 percent ($4.4)
► Retail Sales and Use: 51.5 percent ($11.9)